Australia

AU Budget 2013: The federal Budget housing boost for seniors a dud

FEW Australians will be eligible to benefit from a $12.4 million housing incentive that was a centrepiece of the federal Budget this week.

The Government’s trial program to assist the elderly to downsize their homes has such rigid requirements that the majority of seniors won't be able to utilise it, property experts say.

Under the initiative, pensioners who have owned their family home for at least 25 years can sell the property and direct the proceeds into an account that is exempt from pension means testing. The amount of the deposit is capped at $200,000 and the exemption expires after ten years or when the money is withdrawn.

Federal Minster for Housing Mark Butler said the trial, which begins in July next year, is designed to remove the disincentive for seniors to relocate to more age-appropriate housing, and open up suburbs for gentrification and redevelopment.

While the super sector and some retiree groups have welcomed the scheme, national property data indicates that less than 5 per cent of all Australian homes sold have been owned by the same person for 25 years or more, meaning few seniors would be eligible to benefit.

Data national research director Tim Lawless said most homeowners hold their properties for less than ten years before upgrading or downsizing.

"The cycle of property ownership suggests there aren't going to be many people who have held their home for 25 years or more which suggests this pilot will be a bit of a dud unless there are tweaks made to the rules," Mr Lawless said.

When asked who would be eligible and how the trial would work, Mr Butler this week told media the Government "had yet to speak key groups of stakeholders about the particulars".

"We need to talk to the banking and finance sector about products they might be put in place because this is quite a new initiative, and obviously we need to talk to seniors groups as well," Mr Butler said.

Retirement Living Council spokesperson Mary Wood the policy falls short of meeting the needs of pensioners.

"The proposed eligibility requirements are overly onerous and don’t reflect the needs and circumstances of most aged pensioners, Mr Wood said.

"Only a sliver of seniors will be able utilise it."

She said RLC would welcome the opportunity to work with the Government to refine the scheme.